Shale regions, including in eastern Ohio, leading in GDP growth

The Wheeling, West Virginia, region had the country’s fifth-best economic growth rate last year.
The metropolitan statistical area, which includes Belmont County in eastern Ohio, is among many shale oil and gas drilling zones that saw big increases in gross domestic product, according to a new report measuring 381 regions from the Bureau of Economic Analysis.
Areas with significant drilling activity saw higher GDP growth last year.

“Mining in the Marcellus shale formation contributed significantly to the 9.5 percent increase in total real GDP for Wheeling,” the report said.
It isn’t alone – other areas in the U.S. with a lot of drilling activity saw higher GDP in 2014 compared with 2013. That may change in next year’s report. The downturn that’s leading to massive job cuts and a big pullback in drilling rigs began in late 2014.

Here’s a look at some of the energy-centric MSAs and their growth rate last year:

BUT…

Tax revenue falling short; North Dakota gets a ‘wake-up call’

BISMARCK – North Dakota’s tax revenues fell more than $40 million short of projections in July and August as the oil industry continued to idle drilling rigs amid low crude prices, prompting state lawmakers Wednesday to warn of the budget effects and suggest an updated revenue forecast may be needed.

“This is a real wake-up call, I think,” House Majority Leader Al Carlson, R-Fargo, said during a meeting of the Legislature’s Budget Section.

Overall general fund tax revenues were $41.7 million, or 3.9 percent, lower than projected for July and August. Individual income tax collections also were more than $7 million below projections last month.

Sales tax collections were $52 million, or 21 percent, short of projections during the first two months of the biennium that began July 1 and $44 million short in August alone, Office of Management and Budget Director Pam Sharp said.

“I think what really is happening is we are seeing the severe decrease because of the number of decreased rigs in the state,” she said.

The 68 drilling rigs currently operating in the state is down 128 rigs from a year ago.

The Moody’s Analytics forecast released in March projected crude oil prices would average $47 to $53 per barrel during the 2015-17 biennium, but actual prices so far were $44 in July and will likely be in the upper $30s in August, Sharp said.

Carlson recalled that lawmakers had lengthy discussions with Moody’s during the legislative session about whether its oil price and production forecasts should be downgraded, “but we kind of hit a stone wall with them when we were talking sales tax and income tax.”

“If you were to extrapolate this out, I think that we better be really aware of the fact that this could cause some significant problems for our next budget. I mean, how many months in a row of $44 million can we take?” he said.

Carlson predicted unemployment insurance could be the next area to be hit by fewer drilling rigs. He asked for projections on the effects of further reductions in tax collections.

“This is the time to wave the flag and say be careful, and I hope we were conservative enough in our budget during the last session,” he said.

Sharp said her office will closely watch tax collection trends to determine if another Moody’s forecast is needed.

“If Moody’s misses this bad, why would we want to go back to Moody’s?” asked Rep. Jeff Delzer, R-Underwood, chairman of the House Appropriations Committee.

“I do still have faith in Moody’s,” Sharp said. “Things change. Right now they’re the best game in town.”

Admission: Free
A celebration for the Denison, Granville and Licking County communities. We seek to raise awareness of and interest in environmental issues, while having fun and offering a local Earth Day event.